1. The Four Types of Goods

2. Key Terms Excludable Rival in Consumption
When the supplier of the good can prevent people from using the good who don’t pay for it
Rival in Consumption
When the same unit of a good cannot be consumed by more than one person at the same time.

4. Private Goods

5. What makes a good or service private?
The good is excludable
The good has a rival in consumption
For example….

6. Public Goods

7. What makes a good or service public?
You can’t prevent anyone from using it.
Non-excludable
The same unit can be used as many times without reducing the benefit to others
No rival in consumption

8. Is this a pure public good….?

9. Free-Rider Problem
Individuals have no incentive to pay for their own consumption and instead will take a “free ride” on anyone who does pay.
This is why public goods and services exist.
But, this causes a lower production to be produced than what the market wants.

10. Artificially Scarce Goods
Sometimes called “Club Goods”
These are excludable but don’t rival in consumption

11. Common Good Sometimes called “common resources.”
These are non-excludable but do have a rival in consumption.

12. The Tragedy of Commons
When people act rationally based on their self interest but behave contrary to what’s best for society.
This leads to overuse of common resources
Which then leads to market failure (over-consumption)

13. The Four Types of Goods Matrix
Rival in consumption?
Yes No
Private goods
Ice cream
Clothing
Toll ways
Natural Monopolies
Fire Protection
Electricity
Common Resource
Fish (in the ocean)
Environment
Highways
Public Goods
Tornado Sirens
Armed Forces
Yes
Excludable No

14. Do you think ALL education should be a private service or all public?
On a separate sheet of paper, write an economic report that answers this question.
Your report should include some graphical explanations.
Things to consider
Impact on quantity, price
Impact on school environment
Impact on the community
Will a shortage and/or surplus occur?
etc